Swift injustice in modest penalty rates proposal

The Fair Work Commission decision on penalty rates removes any doubt that young people might have still had about their place in the economic order.

The four-yearly review of awards in hospitality, fast food, retail and pharmacy found that Sunday penalty rates 'do not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net'. But whose safety net? Unfair to whom?

These industries are already notorious for exploiting young workers, with numerous cases of routine underpayment and unpaid 'work trials'. Workers are particularly vulnerable in regional areas with high levels of youth unemployment; the alternative to being underpaid is not having a job at all.

Some are managing time between work and study. Most do not have union membership. The scale of precarity is significant: one in four young Australians, for instance, are employed in the retail industry.

In a piece on millennial labour conditions, Sonia Nair points out that hers is the first generation that will have earned earned less over a lifetime than previous cohorts. Educational attainment no longer relates to economic mobility. Paid work has become precarious and precious — insecure and hard to find.

According to the 2014 Australian Work and Life Index, nearly 40 per cent of young people depend on penalty rates as part of their wage. The study also concluded that in a broad cross-section of the working population, 'the choice to work unsocial hours is driven largely by the financial incentive of penalty rates'.

The imperative is so strong that around 70 per cent of employees would not work unsocial hours if penalty rates were not offered. It suggests that working on Sundays is not a matter of lifestyle. In low-wage industries, it is how young people can make up for earnings that they don't receive when they are at university, doing care work or aren't rostered enough as casuals.

The looming cuts to take-home pay vary between industries and employment type (full-time, part-time and casual). A McDonald's counter worker could lose $22.50 from her six-hour Sunday shift. A retail worker could lose as much as $72 from a seven-hour Sunday shift. In cities where young people are also experiencing housing stress, such wage loss could tip someone out on the street.

"In siding with employers, the Commission demonstrates wilful disregard for some of most vulnerable workers in favour of a wealth transfer for business owners."

Remarkably, the FWC acknowledges the impact on award-reliant employees who struggle to cover weekly living expenses, much less save. It cites the Productivity Commission in observing 'most existing employees would probably face reduced earnings as it is improbable that, as a group, existing workers' hours on Sundays would rise sufficiently to offset the income effects of penalty rate reductions'. It recommends 'appropriate transitional arrangements to mitigate such hardship'.

In other words, you may screw over young people, but be gentle. No need to rush it.

In siding with employers, the Commission demonstrates wilful disregard for some of most vulnerable workers in the economy, in favour of a wealth transfer for business owners. It accepts the proposition from employers that current levels limit their trading hours, staffing levels and the range of services. It also accepts the proposition that reducing penalty rates would increase trading and overall work hours and services.

Yet whether this reduction provides an incentive to hire more workers, as employers argue, is debatable. In its own report, the FWC points out that employment effects are overstated, citing studies and submissions that do not support the conceptual model that lower wage costs lead to lower prices, lifting consumer and labour demand. The entire decision seems to rest, then, on speculation — one that relies on the benevolence of business owners.

It is Swiftian, in some regard, a modest proposal to sacrifice the burdensome, impoverished young for the public good.

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Well put, Fatima.
I simply refuse to see how turning low-paid workers into even-lower-paid workers can help the economy.
Absolutely it will delight and assist the likes of Coles, Woolworths and any number of wealthy restauranteurs.
Once again this decision is a victory for the imperialists and I am certain that this Commission would never have been backed by Shorten and Labor if this kind of outcome was foreseen. Fair to whom indeed!
Worse still, the economy may well be on a slightly upward trajectory just now, which will (wrongly) provide affirmation that the Commission’s decision is achieving its desired outcomes.
It should be clear to anyone right now that the United States, which sets itself as the paragon of private enterprise, has created a highly pyramidal (and thus fractured) society by imposing similar restraints on citizens with the least power to object or fight back. Are we that committed to going the same way? I hope not.
Andrew | 02 March 2017

The needs of adult and youth employees are different cans of worms. You have to specify the categories of employer and employee. A small retail business (eg., a café or a suburban mini-market) which employs youth on a weekend is relying on a business model the success of which requires some cultural assumptions: that the youth are living at home and subsidised by (hopefully, an intact two-parent) family, that work is really an opportunity for building up a resume of reliability and experience to help the youth transit to adult employment, that the employer is, in part, a charity provider of opportunities for youth (for which some acknowledgement should be due) while trying to exist in a highly competitive environment in which the selling of commodities easily available from another provider makes the employer essentially a price-taker rather than a price-maker, boosterish nonsense about value-added service, etc. notwithstanding. Cafes, IGAs and fast food chains are not meant to give a single mother, the survivor of a broken relationship or a bereavement, an income that can by itself support a family, although they can serve as the charity provider of a road to more suitably adult employment.Roy Chen Yee | 03 March 2017

This is a very welcome and modest reform of a grossly out of date pay structure. The reality is that many businesses now hut on Sundays and public holidays just because they cannot afford to stay open. young people are deprived of employment the they dearly need. In even good reform there are always winners and losers and the yardstick is the common good. I believe the his sensible change meets this criterion. Just like globalisation, more people gain than lose, and it the poorest the gain most. But it is easy to make a populist case against it. Eugene | 03 March 2017

It seems that this decision by the Fair Work Commission is validly based on its responsibilities established by Bill Shorten as Minister for Works in the Rudd-Gillard government. Speaks volumes for Shorten's confected disapproval of the action. Concerning the students who benefit financially from casual weekend employment on penalty rates, the necessity for paid employment also has its origins in Labor government policy under Whitlam who abandoned the scholarships which provided tertiary education for some 85% of students and replaced them with "free universities" in one of the more moronic decisions of the Labor party. It is dubious that there are too many disadvantaged students attending tertiary institutions in this country. The financially disadvantaged simply can't afford to attend and haven't been able to since scholarships for the academically endowed were scrapped by the Labor party. Quite apart from this, however, the concept of penalty rates when first implemented and supported by the Labor party and trade unions was indeed valid and reasonable at a time when retail outlets closed at midday on Saturday and on Sundays, based on the Christian convention of the day of rest on Sundays and the great Australian commitment to sport on Saturday afternoons. Some services could not be closed down on the weekend e.g. power stations, railway workers and hospitals and those workers manning them deserved penalty rates. Interestingly, on weekends work productivity was cut back for increased pay because of loss of leisure time.There existed a definite weekend, something which this society abandoned years ago. Society has moved on and perhaps so too should employment when the principles which once governed it no longer apply.john frawley | 03 March 2017

I hope there will be some research into how many jobs are created by this pay cut because from the outside it looks like an excuse to cut costs with no underlying benefit. Time will tell.Brett | 03 March 2017

this draconian backward ignorant and odiously reprehensible ruling shows what the Fair Work Commission regards as a 'fair' decision, but I wonder how many young workers were ever actually represented there to describe their living and working conditions? I'll bet London to a brick there weren't as many as the lawyers representing the hard-done by employers.
So this is our brave new world, where 'trickle-down' has taken on an altogether new meaning, and the concept of a 'fair go' seems to have up and gone.
so sad.Walter Paul KOMARNICKI | 03 March 2017

Well summed up!.With household discretionary incomes collapsing, domestic and national debt increasing to unsustainable levels, retail spending will likely diminish. In highly competitive retail precincts, smaller retailers opening 7 days a week may not be viable. Only the big players can afford to spread the losses across the week and its better that smaller retailers move to the burbs and open only on the better trading days/periods (post analysis of sales).Cam BEAR | 04 March 2017

Given that we can no longer rely on our elected leaders to engage in informative debate on the pros and cons of the FWC's findings, is this simply just going to be another Libs VS Labor, rich VS poor, shouting match in parliament designed to boost popularity ratings? How about we give our politicians a pay cut for not doing their jobs properly? I honestly don't even have an opinion on this issue because I switched off when it was clear Turnbull and Shorten couldn't even tell us why the findings were either justified or unjustified.AURELIUS | 04 March 2017

Roy Chen Yee and Eugene, certainly, any little rich kid doesn't need the money. But everyone else ... the vast majority. It's actually quite expensive to support a child in late high school or university if, in the latter case, they're at home, never mind if they're living away from home. Weekend jobs with penalty rates are vital. And no, it wouldn't be the total income of a single mother - or a poor couple - but it's the weekend jobs that make such a difference to these and many others.Margaret | 04 March 2017

Margaret, this change does not get rid of penalty rates but after a great del of consultation and deliberation the commission cannot see any rationale for Sundays being treated differently from Saturday in the regard, and it will lead to many more businesses being opened and may more jobs for struggling young people. By all means give a bigger tip on a Sunday if you really think that working then is uniquely such a tough gig. Eugene | 06 March 2017

"any little rich kid doesn't need the money. But everyone else ... the vast majority." Youth and adult unemployment are different issues. Rich kids also need jobs for personal development into mature members of society. But kids in general have no training or experience to offer and consequently work in 'starter' jobs in which the value-added is not high. The value-added is what the customer is willing to pay for the service above the norm. Most people would not want to pay a penalty loading on the coffee or burger they buy on a Sunday as opposed to the same product from the same shop any other day of the week. The money from which to pay wages does not grow on trees. Woolworths overall might be able to afford weekend loading because of cross-subsidisation (or stealthy inclusion of the cost into every day prices) but that is not an option available to a coffee shop owner or even the average franchisee of a fast food chain.Roy Chen Yee | 07 March 2017

“Most people would not want to pay a penalty loading on the coffee or burger they buy on a Sunday as opposed to the same product from the same shop any other day of the week.” We have been paying weekend and public holiday surcharges at restaurants, cafés and bars for many years. I don’t mind paying it because I accept the cost of socialising at these times is more than at other times, but I seriously doubt café proprietors are now going to remove the surcharge. I expect they will just pocket the extra profit. I doubt many new jobs will be created. The bosses will pocket the extra profit there too and existing staff will be expected to keep working for less. It will be a nice little social engineering experiment to see how/if cutting penalty rates increases productivity. We will probably go down the American path and face growing pressure to tip more generously than we do now, assuming we tip at all. Aussies are generally not known for tipping but customers will probably end up making up for the penalty rate cut one way or another. Brett | 07 March 2017

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